Page 22 —
COLORADO REAL ESTATE JOURNAL
— April 20-May 3, 2016
Finance
by John Rebchook
Eric Tupler was putting on the
Ritz.
Putting a loan on the Ritz-
Carlton Denver, that is.
Tupler, a senior managing
director in HFF’s Denver office,
was part of the Holliday Feno-
glio Fowler LP team that earlier
this month arranged $55.1 mil-
lion in refinancing for the 202-
room Ritz-Carlton on a half-acre
site at 1881 Curtis St.
The HFF team also included
Dan Peek out of HFF’s hotel
group in New York and man-
aging director John Bourret in
Dallas.
HFF worked on behalf of
the owner of the Ritz-Carlton,
Chicago-based Pearlmark Real
Estate Partners.
Tupler and his team placed
the floating-rate loan with the
Canadian Imperial Bank of
Commerce.
The CIBC loan replaces a $51
million refinancing that Tupler
arranged for Pearlmark about
three years ago.
There was a great deal of inter-
est from lenders to refinance the
debt on the Ritz-Carlton, accord-
ing to Tupler.
“Whenwewent out to themar-
ket with it, we received interest
from both foreign and domestic
banks, as well as from life insur-
ance companies,” Tupler said.
Tupler received offers from
other Canadian banks, as well
as from two European banks,
he said.
A number of the lenders came
to Denver to tour the Ritz-Carl-
ton and take the pulse of Denver.
“They all went away
impressed,” Tupler said.
CIBC found a lot to like about
the deal and the overall Denver
economy, he said.
“The interest level, first, was
driven by the brand name of
Ritz-Carlton,” Tupler said.
“Along with that, was their
perspective on the quality of the
asset,” he said.
The Ritz-Carlton underwent
$9.3 million in capital improve-
ments between 2013 and 2015.
“The Four Seasons and the
Ritz-Carlton are probably the
nicest hotels in Denver today,”
Tupler said.
One topic, however, was the
hotel building boom underway
in Denver, as well as the poten-
tial impact of the Gaylord con-
vention center and hotel planned
in Aurora.
“That certainly was a conver-
sation we had with every lend-
er,” Tupler said.
The Gaylord, alone, will have
more than 1,500 rooms.
However, HFF’s analysis
showed that existing hotels such
as the Ritz-Carlton should do
just fine, despite the increase in
supply.
Rather than just look at the
number of rooms coming, he
said they dug deeper into occu-
pancy and room rates.
“RevPAR is very strong,”
Tupler said.
“Both room rates and occupan-
cy rates have been much higher
than historical levels,” which in
fact, are the main driving forces
in all of the hotels being built or
planned in downtown Denver,
as well as in neighborhoods from
Cherry Creek to West Highland.
“A lot of these hotels won’t be
open for another three years, so
there is quite a bit of runway for
existing hotels before the new
ones come on line,” Tupler said.
Hotels, he said, are unique as
far as asset class.
“The funny thing about a hotel
is that they are most effective
economically when they have
occupancy rates of about 75 per-
cent,” Tupler said.
“That is because every time
someone leaves a room, there is
a cost associated to prepare it for
the next guest,” he said.
It may be counterintuitive, but
the goal is not to operate a hotel
that is fully occupied, he said.
“With every other asset class,
whether it is an office, retail or
industrial, your goal is to have
it 100 percent occupied,” Tupler
said.
“One-hundred percent occu-
pancy is not your goal with a
hotel,” he said.
“There is more cash flow to the
bottom line, when hotels have
some vacancy,” Tupler added.
CIBC is no stranger to Denver.
A couple of years ago, for
example, Tupler and his team
arranged a loan through CIBC
for Stanford Place II in the Den-
ver Tech Center
“I believe that was about a $40
million loan,” Tupler said.
He said foreign banksʼ interest
in Denver is a sign that Denver
is increasingly being seen as a
major destination city, he said.
“It wasn’t that long ago that
most foreign banks focusedmost
of their energy in major cities
on either coast, and Chicago,”
Tupler said.
“Everyone
was
really
impressed about the strength
and diversity of Denver’s econ-
omy,” Tupler said.
The hotel opened in 2008, just
as the Great Recessionwas about
to ravage the entire nation.
Pearlmark acquired it when it
was a distressed property dur-
Shown is the Ritz-Carlton Denver.
